Construction costs are currently skyrocketing

Germany is sometimes really funny. Speed limits are taboo, but letting tenants freeze is being debated?

People might build smaller but smarter. And with different materials and designs. The "broad mass" will probably no longer build 200 sqm city villas with glass elements all around, children's bathrooms, extra extra rooms etc. in the future. I estimate there will be more compact floor plans and fewer 20,000 euro kitchens in classic single-family houses.

I believe the broad mass has never built that before. I rather believe that the type of house builder will change. Fewer families with children, more childless dual earners, and more elderly people whose children have already left home. From the financial position, it is easier to build. Regarding temperature reduction... I'm not quite sure how that should work. The landlord does not control it himself but the individual thermostats in the rooms. Of course, you can lower the flow temperature, but that is very indirect. At first, all thermostats stay open longer, and only when they are permanently open does lowering the flow temperature also lower the temperature. But that is not so easy to control.

You can of course lower the lead time, but that is very indirect.

Yeah, exactly like that. If only 40 degrees flow through the radiators instead of 50 or 60 degrees, you can permanently set it to 5, the place stays cold.

Yes, but you can hardly control the final temperature, it also strongly depends on the specific room. And if instead of the planned 20 degrees it's only 15, the tenant will put in a fan heater. You'll probably have mold then, too. Pyrrhus sends his regards. But that's something we've known quite well from the politics of the last 2.5 years.

I'm also not quite clear yet on what advantage the landlord would have in this. Heating costs are additional costs and are to be borne by the tenant. For that, mold and disputes with tenants...

And if instead of the planned 20 degrees there are only 15, the tenant will put in a fan heater. You'll probably have mold then too. Pyrrhus sends his regards

at 15 degrees room temperature no one ventilates anymore and the drying racks stand in all rooms for a week

Just out of curiosity: What do you think, how much will prices for new builds fall and where will interest rates be in a year?

I believe it’s relatively predictable that interest rates will definitely not be cheaper than they are today. The interesting part will be how strongly the ECB will have to react – the pressure from the FED and other banks does not leave it as an isolated actor. But that would only be the lower end – the outlook for the future is currently quite, quite bleak, so interest rates will likely continue to move upward. Take the guest topic, that’s coming..

The consequence: the directly available volume of money for a purchase/build – i.e. equity plus loan amount – continues to shrink because the cost of money increases over the term. Due to inflation, the share of household income affordable for loans/housing also shrinks – even now, the current burden is simply no longer feasible for many.

This means a further drop in demand. Or also a shock. I always like to refer to the number of threads/project presentations here in the forum. It’s probably slowly reached zero. And if so, we’re talking about incomes of €7,000 net and more – and even then there are great doubts whether the project is a good idea. So we have completely left the middle class behind and reached the lower upper class encountering problems buying. Unless they have larger equity shares in the millions..

For new builds – or rather new build prices – this will probably take the longest. Before that, things tend to start with land. The bubble prices are no longer sustainable. To even get an offer for the extremely collapsed demand, the construction industry will have to adjust. It has not really been notable for innovation so far. Since the global consumer market is currently quite collapsing, international transport will also become easier again sometime next year. Then the German timber price can no longer decouple from the world market, and raw materials will also come under pressure again.
Otherwise – for new build projects from developers I have already seen price reductions in marketing, small (€30,000), but at least. At the price asked, you have to look a very long time for a crazy buyer – especially when 10, 20 others are trying at the same time..

FOMO is over and for many it is ending harshly – loans are no longer approved. The cycle continues as usual – we’re getting a buyer’s market.